Facebook’s Libra currency: Cryptocurrency breakout coming?

Cryptocurrency is a form of digital or virtual currency projected to be secure and, in most cases, anonymous to work as a medium of exchange using computer network. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled. Such an almost uncrackable coding based online money exchange system use decentralized control as opposed to centralized digital currency and central banking systems. After the 90’s tech boom, the world witnessed many attempts at creating a digital currency systems like Flooz, Beenz and DigiCash but the one of successful attempts was in 2009 with ‘peer-to-peer electronic cash system’ bitcoin. Other digital currencies like Litecoin, Ripple, Ethereum and so on aren’t accepted as widely just yet.

Mark Zuckerberg, the founder and driving force of Facebook, looks setting on trying to create a new  digital currency called Libra—a Latin-based name, from which the £ symbol is derived—to allow its billions of users to make financial transactions across the globe. Facebook is supposed to set its hand to this task with the 28 soon-to-be founding members which seemingly paves the way of this journey. Categorically they are:

•          Payments: MasterCard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
•          Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
•          Telecommunications: Iliad, Vodafone Group
•          Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
•          Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
•          Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking.

It is a worth mention that, this is not very first attempt for Facebook planning such a brave project. A decade ago, Facebook created a virtual currency named Facebook credits unfortunately became failed experiment as a result of improper policy and strategy. They limited its exchange to only in social media with a very few online products which consumers were merely 20% of the whole Facebook users. This time, Facebook is not ridding for fall as they are fixing all the deficiency they had before. Founder Mark Zuckerberg met Mr. Carney, governor of Bank of England, last night to have a discussion on the issue of opportunities and risks involved in launching a crypto-currency. He is also procuring the technical advice from officials at the US Treasury. So this second endeavor with might and main is not going to be a nine days’ wonder. Before the official Libra launch, Facebook is hoping to reach 100 founding members. They will even keep their door open to their rival Google or Twitter just to carry their plan into effect this time. The technology Facebook is using for its new currency is called blockchain technology that is basically a continuously growing list digital records in packages (called blocks) which are linked and secured using cryptography. Simply it may be called a ledger of blocks of information which is stored chronologically and only the community users have the authority to view it. All the IT experts have acknowledged that this technology has almost zero possibility of tampering or hijacking.

In the meanwhile, Facebook is facing significant backlash over creating its new cryptocurrency. US lawmakers have urged Facebook to halt the development of the product, dubbed Libra, until congress and regulators can review the issue. In response, a Facebook representative said the company is looking forward to answering lawmakers’ questions. French Finance Minister also criticized saying this instrument for transactions will allow Facebook to collect millions and millions of data. But Facebook got an open mind on the potentiality of its product from the governor of Bank of England and Switzerland’s financial watchdog. As Facebook has some bad records of manipulating users’ data in different purpose and other controversial incidents like happened in the last USA presidential election where Facebook was indulged in Russian interference, many experts across the European Union have raised the demand of strict regulations for the Facebook. Trump blasted Libra currency too which is supposedly the biggest push-back for the Facebook. Certainly, there is a privacy matter that Facebook has to maintain professionally to drive its new digital currency on market. Many suppose that, this cryptocurrency will possibly incite money laundering. Along with such distrust, it has some positive effect too. Cryptocurrencies are fraud-proof as I explained before. It reduces additional cost in exchange. It is more comfortable and easier than traditional money exchange system. So, let’s see, how Facebook manage itself from too much upcoming push-back and go forward.